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Denial gets a bad rap. It’s actually a highly functional strategy for dealing effectively with many kinds of challenging professional and personal situations.

Given the state of the economy and the world these days – and the limited ability most of us have to impact it – it would be hard to get out of bed some days if we didn’t have a healthy capacity for denial.

The Eternal Optimist

In the nonprofit sector, this “positive denial” is a particular hallmark of leaders who are so dedicated to their personal cause or to the mission of their organization that they simply won’t take “no” for an answer. No obstacle is too great to overcome. No rejection from a funder is cause for despair. Every setback leads to a redoubling of effort.

And often enough, these inspirational leaders are quite successful at building extraordinary organizations or galvanizing support around a cause. Chances are you know a few of them. Maybe you even are one of them – at least some of the time.

The Reality of “No”

When times are particularly tough though, eternal optimism can be dysfunctional, creating barriers to the kind of reality-based, out-of-the-box problem-solving that’s needed when a crisis looms. Sometimes, “no” really is the answer, no matter how many ways one asks. At that point, it’s time to shed the protective cloak of denial and look elsewhere for answers.

Keeping the Faith and a Reality Check

The best leaders have the ability to accept reality and forge ahead, no matter how difficult that may be. In his seminal book Good to Great, Jim Collins referred to this quality as the “Stockdale paradox” after ex-POW James Stockdale. He summarized it as the ability to “retain faith that you will prevail in the end … AND at the same time confront the brutal facts of your current reality …”

At TSNE lately, we’ve seen otherwise smart, successful leaders paralyzed into inaction by the dramatic downturn in their nonprofits’ fortunes. These folks haven’t been able to confront the brutal reality of their changed circumstances and instead engage in the magical thinking version of denial, expecting that things will suddenly get better, that they won’t need to lay off staff, cut back on programming, or think seriously about substantive collaborations or even a merger.

But the longer they wait to explore options, the fewer options will remain and the more difficult and painful things will become, especially for staff who may have little inkling that their jobs are in immediate jeopardy.

Get Out in Front of This Crisis

So don’t be a deer in the headlights! Seek help sooner rather than later. Find colleagues to brainstorm with. If you can afford it or can persuade one of your funders to underwrite it, hire a consultant with experience in organizational transitions.

Get out ahead of events lest they overtake you. Would you rather find a partner on your own or have a foundation pressure you to merge or collaborate with other groups whose mission and constituency doesn’t really match yours?

In the ED Forum, TSNE’s Executive Director Jonathan Spack reflects on issues facing nonprofit organizations in and around the Boston area and across the nation. Follow Jonathan on Twitter @JonathanSpack.